Author

Document Type

Degree Name

Degree Program

Management

Year Degree Awarded

Spring 2014

First Advisor

Dr. Neil Longley

Second Advisor

Dr. Christian Rojas

Third Advisor

Dr. Nelson Lacey

Subject Categories

Sports Management

Abstract

Competitive balance (the level of equality of playing talent across teams) is presumed to be a necessary element for league success due to the unique inter-dependent economic nature of professional sports which requires teams to have financially healthy rivals in order to field games (Rottenberg 1956). Underlying this notion is the uncertainty of outcome hypothesis, which suggests that a fan’s interest in professional sports is dependent on various levels of uncertainty of outcome: individual game uncertainty (who will win the game), individual season uncertainty (who will win the championship), and consecutive season uncertainty (does the same team win the championship every year) (Cairns 1987). Although there is an expanding body of literature that empirically tests the uncertainty of outcome hypothesis, most of it focuses on attendance responses to within-game or within-season measures of competitive balance. In addition, nearly all previous studies focus on regular season outcomes only and completely ignore the playoffs (Longley and Lacey 2012). Filling in a notable gap in the literature, this dissertation thus uses a new metric of competitive balance that relies on inter-seasonal measures of qualification for and advancement in the playoffs.

In addition to measuring fan response to this new measure of competitive balance that incorporates both playoff outcomes and consecutive season effects in a novel way, this dissertation also investigates the effects of league playoff rules on competitive balance. No previous study has analyzed how the number of teams that qualify for the playoffs affects fan interest in a league through competitive balance concerns. On the one hand, increasing the number of teams that qualify for the playoffs should increase fan interest by increasing the overall pool of teams that are competitive for a playoff spot. On the other hand, increasing the number of teams that qualify for the playoffs shifts the importance from the regular season to the playoffs, reducing fan interest in the regular season. This dissertation empirically investigates the issue of fan response (as measured by league-wide regular season attendance figures) to varying levels of inter-seasonal competitive balance as measured by the churn of playoff qualifying/advancing teams and as affected by league playoff structures that dictate the number of teams making the playoffs.

The results show that small changes in league playoff structure can significantly affect attendance. It is predicted that if Major League Baseball were to further increase the number of teams that make the playoffs from 10 to 12, the average attendance per game would increase by over 4,300 (about 14% of the current average). In the National Hockey League, a reduction in the number of teams that make the playoffs from 16 to 14 is expected to increase the average attendance per game by over 700 (about 4% of the current average). These results highlight the importance of including playoff considerations when investigating the uncertainty of outcome hypothesis as well as the value of competitive balance to sport league success.